India’s external trade in FY 2025–26 delivered a headline that looked steady but concealed significant stress beneath. Total exports reached approximately US$ 860 billion, growing 4.22% — a respectable number in isolation, until imports growing at 6.47% pushed the overall trade deficit past US$ 119 billion. The year unfolded against a punishing global backdrop: geopolitical realignments, supply chain fragmentation, and a late-year West Asia conflict that sent March export figures sharply lower.
Yet India’s trade response was neither passive nor uniform. Services exports expanded nearly 8%, the merchandise basket held its diversity, and several high-growth categories signalled genuine structural shifts underway. The full picture, as ever, demands reading beyond the aggregates.
India’s external trade performance in FY 2025–26 reflects a story of resilience under stress—steady expansion in aggregate exports, but with clear signs of strain from an increasingly fragmented global order. Total exports reached about US$ 860 billion, growing 4.22%, even as imports rose faster at 6.47%, pushing the overall trade deficit wider to over US$ 119 billion. This divergence is not accidental; it mirrors the global macro backdrop of the year—marked by geopolitical tensions, supply chain realignments, and commodity price volatility. The late-year disruption in West Asia, for instance, sharply curtailed trade flows with the region, underscoring how quickly geopolitical shocks now transmit into trade balances.
What stands out, however, is the structural composition of India’s trade response. While merchandise exports showed only modest growth, services exports expanded nearly 8%, reinforcing India’s emerging role as a services-led stabiliser in global trade. At the same time, the export basket remained diversified—ranging from engineering goods and electronics to agriculture and marine products—allowing India to partially offset regional and sectoral shocks. Yet, the faster growth in imports, particularly in non-oil, non-gold categories, signals strong domestic demand but also a deeper integration into global value chains where import dependence remains significant. In essence, FY 2025–26 captures India at an inflection point: a trading economy navigating geopolitical fragmentation with diversified exports and strong services competitiveness, but still contending with structural trade imbalances in a rapidly shifting global landscape.
Commerce Secretary Rajesh Agrawal stated that India’s exports are performing well despite prevailing challenges. He, however, noted that amid the conflict involving the US, Israel, and Iran that began on February 28 this year, India’s exports to West Asia declined by 57.95% in March. He added that imports from the region also dropped by 51.64% during the month. Meanwhile, imports of crude oil and related products fell by nearly 36% year-on-year to US$ 12.18 billion, while gold imports decreased by 31.6% to US$ 3.06 billion.
Merchandise trade shows widening deficit
India’s export growth was underpinned by a diversified basket including engineering goods, petroleum products, electronics, pharmaceuticals, chemicals, textiles, gems & jewellery, rice, and marine products, reinforcing its role in global value chains. Key export markets continued to include the US, UAE, China, the Netherlands, and the UK.
In FY 2025-26, merchandise exports saw a slight uptick, rising to US$ 441.78 billion from US$ 437.70 billion in the previous year (FY 2024-25). In contrast, merchandise imports grew at a faster pace, increasing to US$ 774.98 billion from US$ 721.20 billion, indicating stronger inbound trade.
Consequently, the merchandise trade deficit expanded to US$ 333.19 billion in FY 2025–26, compared to US$ 283.50 billion in the previous fiscal year.
Non-petroleum and non-gems & jewellery exports in FY 2025–26 increased to US$ 359.67 billion from US$ 344.50 billion in FY 2024–25. Meanwhile, imports of non-petroleum, non-gems & jewellery items—including gold, silver, and other precious metals—rose to US$ 498.56 billion from US$ 454.59 billion during the same period.
Key export destinations (in terms of change in value, exhibiting positive growth) included China (36.66%), Spain (46.33%), Hong Kong (33.22%), Vietnam (22.78%), and Sri Lanka (21.14%). On the import side, major source countries (in terms of change in value, exhibiting growth) were China (16.03%), the USA (15.95%), Hong Kong (23.32%), Peru (78.08%), and the UK (36.09%).
Trade patterns in March 2026
In March 2026, merchandise exports declined to US$ 38.92 billion from US$ 42.05 billion in March 2025, while imports also eased to US$ 59.59 billion from US$ 63.74 billion, suggesting a moderation in trade activity on a year-on-year basis for the month.
Table: India’s trade performance in March 2026
| Category | Mar-26 |
Mar-25 |
|
| Merchandise | Exports | 38.92 | 42.05 |
| Imports | 59.59 | 63.74 | |
| Services | Exports | 35.20 | 35.63 |
| Imports | 16.96 | 17.48 | |
| Total trade (Merchandise +Services) | Exports | 74.11 | 77.67 |
| Imports | 76.55 | 81.22 | |
| Trade Balance | -2.44 | -3.55 | |
Source: DGCIS; figures in US$ billion
The data shows that India’s trade deficit improved in March 2026, narrowing to US$ 2.44 billion compared to US$ 3.55 billion in March 2025.
Non-petroleum and non-gems & jewellery exports declined to US$ 31.69 billion in March 2026 from US$ 34.25 billion in March 2025. In contrast, imports of non-petroleum, non-gems & jewellery items—including gold, silver, and other precious metals—rose to US$ 41.87 billion from US$ 37.99 billion during the same period.
Services exports continue to power India’s trade balance
Services trade showed a slight moderation in March but remained robust over the full fiscal year. In March 2026, services exports were estimated at US$ 35.20 billion, down marginally from US$ 35.63 billion in March 2025, while imports also eased to US$ 16.96 billion from US$ 17.48 billion.
For FY 2025–26 (April–March), services exports rose to an estimated US$ 418.31 billion from US$ 387.55 billion in FY 2024–25. Services exports are estimated to have grown by 7.94% in FY 2025–26 (April–March) compared to FY 2024–25. Services imports increased modestly to US$ 204.42 billion from US$ 198.72 billion.
Consequently, the services trade surplus widened to US$ 213.89 billion in FY 2025–26, compared to US$ 188.84 billion in the previous year, reinforcing the sector’s role as a key contributor to India’s external stability.
Conclusion
India’s trade account in FY 2025–26 closed on a familiar note — resilient on the surface, unresolved underneath. Merchandise exports inched up to US$ 441.78 billion, but imports outpaced them decisively, stretching the goods deficit to US$ 333 billion. The West Asia shock in March was a reminder of how quickly geopolitical fractures translate into trade disruptions. What kept the headline numbers respectable was services — a US$ 213.89 billion surplus that continues to do the heavy lifting on India’s external balance.
The faster-growing export categories tell a more optimistic story: electronics climbing the value chain, agri-commodities capitalising on global supply gaps, marine and coffee exports finding new markets. But structural import dependence — particularly in non-oil, non-gold categories — signals an economy still deeply tethered to global supply chains it does not yet control. India is diversifying its export base intelligently; the harder task is reducing the import intensity of its own growth.
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FAQs
How did India’s total exports perform in FY 2025–26?
India’s total exports rose to US$ 860.09 billion in FY 2025–26, registering a growth of 4.22% compared to the previous fiscal year.
How did imports perform during FY 2025–26?
Imports increased at a faster pace than exports, rising by 6.47% to US$ 979.40 billion, which contributed to a widening trade deficit.
Which countries were key export destinations for India in FY 2025–26?
Major export destinations included the US, UAE, China, the Netherlands, and the UK, along with strong growth in markets like Spain, Vietnam, and Sri Lanka.
Which import sources recorded the highest growth?
Significant growth in imports was seen from countries such as China, the USA, Hong Kong, Peru, and the UK during FY 2025–26.
Which sectors drove India’s export growth in March 2026?
Key performing sectors included other cereals, mica and minerals, handicrafts, petroleum products, engineering goods, and marine products, all showing positive growth in March 2026.
